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The USDJPY witnessed a substantial surge in selling pressure
driving it down into the realm of 150 yen per dollar.
“In the contemporary New York foreign exchange market, the USD/JPY witnessed a substantial surge in selling pressure, driving it down into the realm of 150 yen per dollar”
This decline was predominantly instigated by a noteworthy plunge in U.S. bond yields, which played a pivotal role in enticing traders to engage in extensive selling. The decision from the U.S. Treasury concerning the upcoming quarterly regular auction did not align with the initial expectations, further contributing to the downward momentum. Simultaneously, the ISM Manufacturing Purchasing Managers’ Index (PMI) underperformed, intensifying the yield’s descent.
During the afternoon, the Federal Open Market Committee (FOMC) unveiled the outcome of its meeting, adhering to projections by maintaining the policy interest rate at its existing level. Although there were some slight alterations in the accompanying statement, it largely echoed the preceding one. Chairman Powell, during his eagerly awaited press conference, adopted a cautious stance, emphasizing the need for prudent consideration given recent developments. However, he also introduced the prospect of justified rate hikes, contingent on the GDP’s surpassing of potential growth, while dispelling concerns regarding the resumption of rate hikes after a pause. Notably, he clarified that rate cuts had not been under consideration, discussion, or even mentioned.
The prevailing market sentiment interprets this stance as a “hawkish hold.” Nonetheless, expectations for further rate hikes have moderately receded in the short-term financial market, fueled by the recent uptick in yields. Consequently, some market participants view the likelihood of rate hikes in December as relatively low.
The EUR/USD briefly ventured into the lower 1.05 dollar range, implying a potential breach below the 1.05-dollar threshold. However, following the release of the FOMC outcomes, the exchange rate has demonstrated resilience. Nevertheless, it has displayed indications of descending beneath the 21-day moving average, underscoring the continued predominance of sellers.
Despite the absence of significant developments within the Eurozone today, the recurrent trend of subpar data releases keeps alive the market’s anticipation of an early interest rate cut by the European Central Bank (ECB).
In the case of GBP/USD, the currency pair exhibited fluctuations within the 1.21-dollar range. The 21-day moving average currently gravitates around the 1.2180-dollar level, yet the exchange rate has consistently remained below this threshold.
Tomorrow ushers in the scheduled meeting of the Monetary Policy Committee (MPC) at the Bank of England. While the market is widely expecting an unchanged rate decision, some have voiced concerns that recent data fails to substantiate a renewed ascent in rates. The UK’s most recent economic data portrays a lack of substantial shifts, indicating a high threshold for the Bank of England to justify any alterations to its current policy stance. Recent communications from the committee members of the Bank of England have signified a preference for a cautious approach. Therefore, it is envisaged that, despite the potential for further rate hikes, the central bank will strive to maintain a balanced approach in its future policy decisions.
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